Weak start for oil prices after U.S. labor data

Oil prices off to a weak start to end the first trading week of
2017 as early exuberance over OPEC brushes up against economic
sentiments. File photo by Monika Graff/UPI

| License Photo

U.S. labor
figures supportive of growth sentiments from central bankers and
optimism about a price floor did little to kick off an oil price rally
early Friday.

The U.S. Labor Department said Friday the
unemployment rate of 4.7 percent and the number of those sidelined from
the workforce at 7.5 million changed little
in December. "Both measures edged down in the fourth quarter, after
showing little net change earlier in the year," the report read.

In defending a hawkish rate policy, the U.S. Federal Reserve
said in its recently published minutes from December that jobs gains
have been "solid" and economic activity was expanding at a moderate
pace.

Crude oil prices this week moved in wide
swings following a jump at the start of a trading week shortened by the
New Year holiday. Oil moved strongly in Asian trading, but settled at
the start of trading in New York on what could be perceived as a mixed
bag of economic news apart from the unemployment rate.

The price for Brent crude oil was down 0.4 percent to open the day at $56.68 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was down 0.2 percent to start the trading day at $53.66 per barrel.

The Labor Department said most of the gains in
December came from the healthcare and social-services sector. Job
growth last year, however, was 2.2 million, less than the 2.7 million
recorded in 2015. Average hourly earnings, meanwhile, increased 2.9
percent last year.

An economic survey
from the Royal Bank of Canada said a decision by members of the
Organization of Petroleum Exporting Countries to trim production in an
effort to balance the market had put a floor price under crude oil.

"We still subscribe to the view that slow and
steady wins the sustainable recovery and overall, we expect prices to
trend mostly sideways over the coming months," the report read.

Meanwhile, an economist at the Federal Reserve Bank of Dallas said there were signs of economic strain
emerging despite the sentiment building around the labor sector. Anton
Cheremukhin, a senior economist at the bank, described last year's
contraction for the energy sector as a "small shock" to the broader
economy.

There are few indications to suggest a recession is right around the corner, he said, but remains in a "fragile state."

Weak start for oil prices after U.S. labor data
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